AZ Announces a $35 Cap on Inhalers, But a Bigger Point Keeps Getting Missed

This seems like a good time to remind the few folks who aren’t already tracking: Drug Channels’ Adam Fein is hosting his next webinar — on the impact of the Inflation Reduction Act — on April 5 at noon, ET. Given the amount of oxygen expended around here on the IRA, this feels like something to circle on the calendar.

So AstraZeneca said yesterday that it would cap the price of its inhalers at $35, joining Boehringer Ingelheim in making such a pledge. The move made Bernie Sanders happy and generated a ton of pretty positive media. (Exhibit A: the Washington Post.)

As with BI, I’m a little at a loss for the actual mechanics here. This feels like the companies are just turbo-charging their patient assistance, following the playbook of the insulin manufacturers. That’s not to slight the effort around inhalers (the insulin patient assistance safety net is truly a wonder), just my best guess on what’s going on. 

But it feels like the bigger story is being missed. AZ and BI both slipped into their press releases a note that list prices would be cut as of January 2025, which is more than likely part of efforts to avoid paying excessive penalties now that Medicaid inflation penalties can exceed the actual cost of the drug. That’s the dynamic that prompted insulin companies to slash prices on their drugs at the beginning of the year.

And yet, despite the barrage of coverage, no one seems to have mentioned that list prices for inhalers will be falling. It seems like a big deal, especially given the broader trend, and there’s no reason it will stop with inhalers. There are, in theory, lots of medicines that will be affected by the removal of the so-called AMP cap. 

I haven’t seen any discussion of whether price-lowering in the face of the AMP cap issue impacts revenue, but it clearly pops, somewhat, the list-to-net bubble, bringing the actual prices paid closer to the list prices. And that feels like a good thing.

There is a helpful assessment in JAMA looking at the number of state Medicaid programs that covered anti-obesity meds at the start of 2023: 10 of 47 states that have public preferred drug lists included at least one obesity med. The supplemental materials for the article break things down by state and by drug. It’s an illuminating resource, even if it’s already somewhat out of date. It’s also by the Harvard PORTAL team, which means that it’s an excuse to stump for price controls: “ensuring access to these drugs for the vulnerable Medicaid population requires states or the federal government to negotiate lower prices.” That’s pretty strong language. The budget impact definitely requires action, but it’s narrow thinking to suggest that the only option for coverage of a cost-effective drug is price controls. 

PBM reform, in its current iteration, is dead, per STAT and Politico. 

It’s possible that cost-effectiveness assessments of medicines have been systematically undervaluing drugs because the standard discount rate used in the calculations is artificially high. That’s a tremendously dull sentence to have had to write, but it’s an important one, given how important the discount rate is when projecting the future. Anyway: there is an effort afoot — detailed well by Tufts’ Joshua T. Cohen in this Value in Health piece — to change the standard to more accurately reflect reality.